A refusal to make a ‘Collective Proceedings Order’ in England can be appealed

In its 13 November 2018 judgment in Merricks v MasterCard, the English Court of Appeal (the CA) determined that a refusal by the Competition Appeal Tribunal (CAT) to grant a Collective Proceedings Order (CPO) can be appealed to the Court of Appeal.

A CPO is the order by which the CAT authorises a class representative to act as such in the collective proceedings action and sets out certain basic details, such as the parties’ names, the definition of the class (and any sub-class), the common issues to be determined and the remedy sought. Without a CPO the collective action cannot proceed.

The CA concluded that the refusal of a CPO is likely to prevent individual members of the represented class who have suffered loss from obtaining any compensation. Consequently, it concluded that in substance, a refusal of a CPO is a decision as to the award of damages within the meaning of the Competition Act 1998 (CA98), which can, consequently, be appealed to the Court of Appeal.

Background

In September 2016, Mr Merricks commenced an opt-out collective action against MasterCard seeking damages in relation to the MasterCard interchange fees charged in the UK. He sought an aggregate award of damages and interest totaling £14.098bn on behalf of all individuals who, between 1992 and 2008, had been over 16 years of age and resident in the UK for a continuous period of at least three months and who purchased goods or services from businesses in the UK who accepted MasterCard cards. This was only the second such opt-out damages claim that had been brought in the UK since their introduction in 2015 and was the largest claim in English legal history.

The first hurdle Mr Merricks had to clear was to convince the CAT that his claim was suitable to be brought as a collective action and to obtain a CPO from the CAT. In July 2017, the CAT refused to certify the claim as suitable for collective proceedings and the claim was, accordingly, dismissed. The question was: by what route could Mr Merricks challenge that refusal?

Challenging a Refusal to Certify

According to the CAT’s ‘Guide To Proceedings’, if a proposed representative wishes to challenge the refusal of a CPO, the challenge must be brought by way of judicial review to the Administrative Court. The CA98 was, however, unclear in that it provides that an appeal could be made against decisions as to awards of damages. The material question therefore was: does a refusal to grant a CPO amount to a decision as to an award of damages?

The English procedural rules provide that a party to proceedings wishing to appeal must apply to the first instance court at the time that the judgment is handed down. Accordingly, Mr Merricks made such an application to the CAT. The CAT refused permission on 28 September 2017, holding that it did not have jurisdiction to grant permission to appeal. It reasoned that the refusal of a CPO leaves individual class members free to seek individual damages and does not, therefore, bar an award of damages.

In response, Mr Merricks sought permission to appeal from the Court of Appeal. At the same time, he filed proceedings seeking judicial review of the CAT’s decision to refuse the CPO. The grounds of challenge were, essentially, identical.

Court of Appeal Decision

The Court of Appeal considered that the question of its jurisdiction to entertain an appeal on a point of law from a decision of the CAT refusing to make a CPO centred on what was meant by “an award of damages”.

The Court considered that when that term was construed in light of its legislative history, an “award of damages” included a refusal to make a CPO. This was because the refusal of a CPO is a determination that the proposed representative is not entitled to seek an aggregate award of damages, which is a remedy unique to collective proceedings. The Court accepted that a refusal of a CPO is likely to prevent individual members of the represented class who have suffered loss from obtaining any compensation. As such, a refusal to make a CPO marks the end of the road for a class action of this kind and substantively represents a decision as to the award of damages.

The Court of Appeal consequently held that it does have jurisdiction to hear and determine the appeal in this case so far as it raises a point of law.

In January 2019, the Court of Appeal will hear the substantive appeal which will determine whether this £14 billion consumer class action may proceed. The Covington Competition Blog will provide further coverage and insights when the substantive appeal decision in the case is published.

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